International Business Machines Corporation (IBM Quick QuoteIBM - Free Report) recently inked a definitive agreement to acquire Envizi for an undisclosed amount. The transaction aims to complement its sustained investments in AI capabilities to enable diverse firms to achieve sustainable business goals and environmental objectives.

Based in Australia, Envizi operates as a premier data and analytics software provider for environmental performance management. It offers key insights to optimize resources for major sustainability reporting frameworks with key software that automates the collection and consolidation of more than 500 data types. With user-friendly customizable dashboards, it enables organizations to analyze and manage environmental goals, identify efficiency opportunities and assess sustainability risks for remedial actions. These, in turn, help firms to fulfill their broader Environmental, Social and Governance (ESG) initiatives and reduce greenhouse gas (GHG) emissions.

IBM intends to integrate Envizi’s software with its Maximo asset management solutions, Sterling supply chain solutions and Environmental Intelligence Suite to help firms create more resilient businesses, sustainable operations and supply chains by generating automated feedback. The Maximo asset management solutions help firms to extend the life expectancy of critical assets while minimizing the environmental impact by providing predictive maintenance and intelligent asset management. The Sterling supply chain solutions help improve supply chain visibility, cut waste by right-sizing inventory and reduce the carbon footprint of shipment and logistics. The Environmental Intelligence Suite allows companies to increase business resiliency by assessing and effectively planning for lower environmental impact on operations.

The Envizi software will be available as a SaaS solution and run in multi-cloud environments. In addition to improving the sustainability initiatives of clients and helping them achieve their ESG goals, IBM will also utilize the software to improve its own operational efficiencies, manage energy consumption and achieve net-zero GHG emissions by 2030.

IBM’s growth is expected to be driven primarily by analytics, cloud computing and security in the long haul. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.

However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. Weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also delay the launch of new products, causing it to lag its peers.

The stock has gained 4.6% over the past year compared with the industry’s growth of 5.1%. We remain impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock.

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Hewlett Packard Enterprise Company (HPE Quick QuoteHPE - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a long-term earnings growth expectation of 5.8% and delivered an earnings surprise of 14.4%, on average, in the trailing four quarters. Over the past year, Hewlett Packard has gained a modest 40%.

Earnings estimates for the current year for the stock have moved up 12.8% over the past year, while that for the next fiscal is up 26.4%. Hewlett Packard has been pursuing acquisitions to focus more on high-margin hybrid IT models that leverage on-premises and cloud-computing power. It views AI, Industrial IoT and distributed computing as the next major markets.

SeaChange International, Inc. (SEAC Quick QuoteSEAC - Free Report) , carrying a Zacks Rank #2, is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaChange delivered an earnings surprise of 37.2%, on average, in the trailing four quarters and has a long-term growth expectation of 10%. Earnings estimates for the current year for the stock have moved up 35.7% since January 2021. Over the past year, SeaChange has gained a modest 55.3%.

Vocera Communications, Inc. sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.

Over the past year, Vocera has gained 80.9%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.